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Snowflake (SNOW) to Post Q1 Earnings: What's in the Offing?

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Snowflake (SNOW - Free Report) is slated to release first-quarter fiscal 2023 results on May 25.

The Zacks Consensus Estimate for the top line is currently pegged at $409.62 million, suggesting growth of 78.94% year over year. The consensus mark for the bottom line has remained unchanged at a loss of 1 cent per share over the past 30 days, which is lower than a loss of 24 cents reported in the year-ago quarter.

Snowflake’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 122.50%.

Factors to Note

Snowflake’s fiscal first-quarter results are expected to reflect the ongoing transition from cloud-based repositories and on-premise data centers to the Data Cloud. The company may have gained from the launch of the new product, Snowpark, in the to-be-reported quarter.

Snowflake Inc. Price and EPS Surprise

Snowflake Inc. Price and EPS Surprise

Snowflake Inc. price-eps-surprise | Snowflake Inc. Quote

Snowpark is a developer framework for data scientists and developers to transform and program data.

The company’s to-be-reported quarter performance might have benefited from gaining the California Department of Public Health and KPMG as customers and key alliance partners utilizing the Snowpark.

Positive momentum in the financial services data cloud and media data cloud might have contributed to the company’s revenues in the to-be-reported quarter.

The financial services data cloud syncs the Snowflake platform with partner solutions and industry data and enables financial services companies to mobilize data and build fintech platforms.

The media data cloud enables media and advertising companies to share data and gain insight into customers. A strong customer base utilizing the media data cloud platform, including Experian, Horizon Media and Roku (ROKU - Free Report) , might have favored the to-be-reported quarter performance.

Roku is leveraging the media data cloud services of Snowflake to protect and drive advertising and subscriber growth.

Strong adoption of its cloud-native solutions in media and telecom, technology, and health care may have driven Snowflake’s fiscal first-quarter top line and expanded its customer base.

At the end of the fiscal fourth quarter, total customers increased 44% year over year, and the number of customers with revenues greater than $1 million reached 184, reflecting a whopping 139% year-over-year growth.

However, the company is facing increased competition in industries like IT and Finance from large, well-established public cloud providers like Amazon’s (AMZN - Free Report) AWS and new and emerging entrants.

Amazon is the leading provider of cloud infrastructure as a service to enterprise customers. The expanding customer base of Amazon Web Services (AWS), driven by its strengthening cloud offerings, is a significant threat to Snowflake. This might have weighed on Snowflake’s top line in the quarter to be reported.

What Our Model Unveils

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.

Snowflake has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock to Consider

Here are some better-ranked stocks to consider in the broader sector to gain more returns.

Analog Devices (ADI - Free Report) currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ADI’s shares have fallen 7.6% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixedindustry’s decline of 17.6%.